In re the Marriage of: Keith Jonathan Hempel, II, Decedent, Tobin Hempel and Joshua D. Krsnak, personal representatives for, Respondent,

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2016).

STATE OF MINNESOTA
IN COURT OF APPEALS
A17-1055

In re the Marriage of: Keith Jonathan Hempel, II, Decedent,
Tobin Hempel and Joshua D. Krsnak, personal representatives for,
Respondent,

vs.

Samantha Leigh Hempel,
Appellant.

Filed September 17, 2018
Affirmed; motion denied as moot
Reyes, Judge

Hennepin County District Court
File No. 27-FA-10-6962

Christopher D. Johnson, Rebecca A. Chaffee, Best & Flanagan, L.L.P., Minneapolis,
Minnesota (for respondent)

Ben M. Henschel, Susan A. Daudelin, Henschel Moberg Goff, P.A., Minneapolis,
Minnesota (for appellant)

Considered and decided by Reyes, Presiding Judge; Hooten, Judg e; and Kalitowski,
Judge.
*

* Retired judge of the Minnesota Court of Appeals, serving by ap pointment pursuant to
Minn. Const. art. VI, § 10.

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U N P U B L I S H E D O P I N I O N
REYES, Judge
Appellant-mother challenges the denial of her motion to reopen the judgment and
decree dissolving the parties’ marriage for fraud on the court, arguing that the district court
(1) abused its discretion in applying laches to bar her fraud claim; (2) erred in concluding,
without an evidentiary hearing, that she failed to make a prima facie showing on all
elements of her fraud claim; and (3) abused its discretion by d eclining to award conduct-
based attorney fees. The personal representatives for father f iled a cross-appeal, arguing
that the district court erred in (1) concluding that mother met her prima facie burden on the
first element of her claim of fraud on the court and (2) exclud ing certain evidence offered
by father. We affirm.
FACTS
Appellant Samantha Leigh Hempel (mother) and Keith Jonathan Hempel II (father)
were married in 2002. They are the parents of two minor childr en. On September 13,
2010, father filed a petition for dissolution of marriage. To facilitate a distribution of assets
b e t w e e n t h e m , t h e p a r t i e s r e t a i n e d a n e u t r a l f i n a n c i a l e x p e r t to prepare a report that
included a valuation analysis of Hempel Properties LLC, in whic h father held a 99%
ownership interest and mother held a 1% ownership interest, and Executive Leasing LLC,
which mother owned, as of September 30, 2010.
On February 23, 2011, father form ed KJH Holdings LLC (KJH). Bo th Hempel
Properties and KJH served as holding companies for a number of subsidiary limited
liability companies (LLCs) that f ather formed for the purpose o f acquiring, developing,

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and selling real estate. On May 27, 2011, father and mother fi led financial-disclosure
statements in district court. Fa ther’s statement disclosed the formation of KJH and listed
its value as “TBD.” Mother’s sta tement identified Executive Leasing and listed its value
as “TBD.” The parties later agre ed that the neutral financial expert would not prepare a
valuation analysis of Executive Leasing as they had originally planned.
On August 2, 2011, the neutral financial expert submitted his r eport, which
estimated the value of Hempel Properties as either negative $2, 137,000 or negative
$1,120,000 as of September 30, 2010, depending on a capitalizat ion rate of 9% or 8%,
respectively. Based on the report and on information that fath er was on the verge of
bankruptcy, mother decided to settle the dissolution rather than proceed to trial.
On August 27, 2011, the parties signed a stipulated judgment an d decree in
dissolution of the marriage, which the district court entered o n October 4, 2011. Mother
received $746,327.37 in total asse ts and father received $356,9 21. Father also agreed to
pay mother $300,000 in a property settlement. The parties’ stipulations included an award
to father of sole ownership of Hempel Properties, KJH, and 19 other LLCs, and he agreed
to assume all related debt. Mother was awarded sole ownership of Executive Leasing. The
parties did not estimate the property value of either Executive Leasing or KJH, and they
represented that “[b]oth parties understood their right to conduct additional discovery and
appraisals and have waived that right.” They also stipulated t hat, for the purposes of
calculating child support, their r espective individual annual i ncomes were $150,000
because their incomes varied from year to year. The judgment a nd decree included a
dispute-resolution clause in which the parties agreed to submit to mediation “[a]ny disputes

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that arise between the parties with regard to this agreement which the parties cannot resolve
between themselves.”
During the pendency of the dissolution, father initiated three business transactions,
which mother later alleged tha t father concealed from her. In January 2011, Hempel
Properties sold the Soo Line building to an investor who agreed to both assume the debt
on the property and provide father with a remainder interest contingent on a future sale of
the property. On October 4, 2011, after the building sold, fat her received a $247,294
payment for his remainder interest. On June 9, 2011, Hempel Pr operties entered into an
agreement to sell Rockridge Cen ter, and on August 9, received $ 1,590,858.56 in
connection with the sale. On June 14, 2011, NorthStar Equity, an LLC formed by father,
executed an agreement to purchase One Financial Plaza using thi rd-party financing. On
August 18, 2011, father received a 1.625% interest in the property at closing.
In the months following entry of the parties’ stipulated judgment and decree, mother
alleged that father purchased a home for $995,000, “joined a co untry club, purchased
expensive cars, and purchased an expensive boat.” In May 2012, mother learned of father’s
home purchase when he moved into the home. On approximately Se ptember 19, 2013,
mother received a 2011 K-1 statement for Hempel Properties, whi ch showed that father
received $1,479,227 in distributions from the business.
In November 2014, father and mother held a mediation to address parenting time,
mother’s 2011 personal tax liability related to Hempel Properties, and father’s “actual vs.
stated income” at the time of the dissolution. Father provided mother copies of his personal
income tax returns for 2011, 2012, and 2013, showing his adjust ed gross income as

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$388,437, $507,910, and $1,246,463, respectively, and a personal financial statement dated
October 19, 2011, estimating the value of Hempel Properties as $1,953,953 and the value
of KJH as $1,621,550. The parti es ended the mediation session without fully addressing
father’s income.
On March 17, 2015, father was diagnosed with brain cancer. Mot her stated that,
due to father’s diagnosis, “[a]t that time, I initiated a pause on conversations regarding the
unfinished business of the previous mediation.” On May 20, 2016, mother filed a motion
in district court for sole legal custody of the parties’ two mi nor children, alleging that
father’s medical condition affected his cognitive ability to adequately parent their children.
The parties subsequently agreed t o mediation, but thereafter we re unable to reach an
agreement on modifying custody.
Following mediation, mother claimed that she had requested to m ediate additional
financial issues, but father agreed only to address the pending custody motion. The district
court ordered the parties to file memoranda addressing whether t h e y h a d p r e v i o u s l y
mediated or attempted to mediate those issues. Based on the parties’ filings, on September
28, 2016, the district court conc luded that mother had previous ly attempted mediation of
the financial issues and granted her requests to dispense with further mediation and to file
a motion regarding her allegations that father misrepresented his income at the time of their
divorce.
On October 28, 2016, mother filed a motion to reopen the dissolution judgment and
decree under Minn. Stat. § 518.145 (2016), and for attorney fee s, which she subsequently
amended on March 2, 2017, to allege that the judgment should be reopened on the grounds

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that father had committed fraud on the court. Following a motion hearing, the district court
denied mother’s motion to reopen the judgment and decree, concluding that the doctrine of
laches barred her claim of fraud on the court because she had u nreasonably delayed
bringing the claim, resulting in severe prejudice to father. T he district court further
concluded that, even if laches did not bar her claim, she faile d to make a prima facie
showing on all elements of fraud on the court, though it conclu ded that the facts alleged
were sufficient to make a prima facie showing on the first element, that father engaged in
an intentional course of material nondisclosures during the dis solution proceedings. The
district court determined that neither party would be awarded attorney fees.
Mother’s appeal and father’s cross-appeal follow.1
D E C I S I O N
I. T h e d i s t r i c t c o u r t d i d n o t a b u s e i t s d i s c r e t i o n b y a p p l y i n g l a ches to bar
mother’s claim of fraud on the court as grounds to reopen the d issolution
judgment and decree.

Mother argues that the district court abused its discretion by applying laches to bar
her claim of fraud on the court because (1) she brought her claim within a reasonable time
of learning of father’s alleged nondisclosures and after attempting mediation and (2) father
was not prejudiced by the delay. We disagree.
A dissolution judgment and decree is generally final when enter ed, subject to the
right of appeal, unless a party brings a timely motion to reopen it. Thompson v. Thompson,

1 Father died in April 2018, after mother filed her appeal. By order filed June 12, 2018,
this court modified the case caption for this appeal to reflect that the respondents are Tobin
Hempel and Joshua D. Krsnak, personal representatives for father, decedent.

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739 N.W.2d 424, 428 (Minn. App. 2007) (citing Minn. Stat. § 518.145, subds. 1, 2 (2006)).
Generally, a motion to reopen the judgment and decree for fraud must be brought within
one year after it is entered. Id. Fraud, however, is distinct from fraud on the court. See
Maranda v. Maranda , 449 N.W.2d 158, 165 (Minn. 1989 ) (noting the existence of “a
difference between ordinary fraud and ‘fraud on the court.’”). A party may bring a motion
to reopen the judgment and decree after one year “if there is proof that the nonmoving party
committed ‘fraud on the court.’” Id. (quoting Maranda, 449 N.W.2d at 165). But if a party
delays in bringing such a motion “an unreasonably long time aft er the original judgment,
the doctrine of laches should be used to prevent abuse [of the doctrine of fraud on the
court].” Maranda, 449 N.W.2d at 166.
“Laches is an equitable doctrine that prevents one who has not been diligent in
asserting a known right from recovering at the expense of one who has been prejudiced by
the delay.” Carlson v. Ritchie , 830 N.W.2d 887, 891 (Minn. 2013) (quotation and
alteration omitted). A party possesses a known right “when he or she has actual notice of
the claim or, in the exercise of proper diligence, ought to hav e discovered it.” Jackel v.
Brower, 668 N.W.2d 685, 691 (Minn. App. 2003). “Prejudice to the oth er party resulting
from delay is an essential element of laches.” Anderson v. First Nat. Bank of Pine City ,
303 Minn. 408, 413, 228 N.W.2d 257, 260 (1975).
We review a district court’s decision to apply the doctrine of laches for an abuse of
discretion. In re Marriage of Opp, 516 N.W.2d 193, 196 (Minn. App. 1994), review denied
(Minn. Aug. 24, 1994). A distric t court abuses its discretion by making findings
unsupported by the evidence, misapplying the law, or resolving the matter in a manner that

8
is contrary to logic and the facts on record.” Johnson v. Johnson , 902 N.W.2d 79, 84
(Minn. App. 2017).
The district court concluded th at mother was not diligent in pu rsuing her claim of
fraud on the court until August 2016, approximately five years after entry of the parties’
stipulated dissolution judgment and decree and three years afte r mother learned of
sufficient facts to pursue the po tential claim. The evidence i n the record supports the
district court’s conclusion. The district court found that mother first had cause for concern
about father’s reported income in May 2012 when she learned tha t he had purchased an
expensive home and then learned of other expensive purchases. Mother admitted that,
sixteen months later, on September 19, 2013, she “became concer ned that [father] may
have mispresented his income to me during our dissolution proceeding” when she received
a K-1 statement for Hempel Properties showing higher than expec ted distributions of
$1,479,227 to father. However, mother took no further action o n her claim for
approximately 13 months until the parties met in mediation in November 2014.
At the November 2014 mediation session, mother obtained financi al documents
from father, which she alleged showed a higher than expected value for Hempel Properties
compared with the neutral expert’s report. After obtaining the documents, mother stated
that she “questioned whether [father] may have misrepresented the financial circumstances
of Hempel Properties.” Yet, despite obtaining this evidence, m other took no immediate
steps to pursue her claim. At her own initiative, and for reas ons we do not question, in
March 2015, mother initiated a pause in any further mediation due to father’s diagnosis of

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brain cancer. We emphasize that this part of the delay based on mother’s humane actions
played no part in the district court’s decision and plays no part in our decision.
In August 2016, during mediation proceedings over the custody o f their children,
mother again raised the issue of father’s income and requested additional financial
documentation. In sum, the evidence supports the district court’s determination that, by at
least September 2013, mother possessed sufficient facts to purs ue her claim of fraud.
Despite the issue being partially addressed in mediation in November 2014, mother did not
follow through in pursuing her claim until August 2016, approxi mately 20 months later.
The district court’s conclusion that mother was not diligent in asserting her claim is
supported by the record and is not clearly erroneous.
The district court also concluded that father was prejudiced b y the delay. The
evidence shows that father’s cap acity to defend against the fra ud claim diminished over
time because of his brain cancer. Since being diagnosed in Mar ch 2015, father received
disability, no longer worked, and he reported becoming weaker. His doctors advised him
that his health was tenuous and t o reduce and eliminate any unn ecessary stress. In May
2016, in her motion for custody, mother alleged that father’s c ondition caused him
occasions of forgetfulness, confusion, and that his completion of simple communication
tasks required tremendous effort. As of March 2017, father rep orted receiving
chemotherapy treatments five times per month, which significantly reduced his energy and
stamina. The district court’s conclusion that father suffered prejudice from mother’s delay
in asserting her claim is supported by the record and is not clearly erroneous.

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Because the district court’s c onclusions regarding mother’s lac k of diligence in
asserting her claim of fraud on the court, along with the resulting prejudice to father caused
by the delay, are supported by the evidence in the record, we conclude that the district court
did not abuse its discretion by applying the doctrine of laches to bar mother’s claim of
fraud on the court as grounds to reopen the dissolution judgment and decree.2
II. Any alleged errors by the district court in concluding that mot her alleged
sufficient facts to make a prima facie showing of the first ele ment of fraud on
the court or in excluding evidence offered by father are harmless.

In their cross-appeal, the personal representatives for father (collectively,
respondents) argue that (1) the evidence does not support the d istrict court’s conclusion
that mother made sufficient factual allegations to meet her pri ma facie burden on the first
element of her claim of fraud on the court and (2) the district court erred by excluding
certain evidence offered by father. We are not persuaded.
To prevail on appeal, a party must show both error and prejudice resulting from the
error. Midway Ctr. Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78
(1975). Appellate courts disregard harmless error. Minn. R. C iv. P. 61 (“The court at
every stage of the proceeding must disregard any error or defec t in the proceeding which
does not affect the substantial rights of the parties.”); see Kallio v. Fo rd Motor Co., 407

2 Because the application of laches is dispositive of mother’s fraud-on-the-court claim, we
do not reach her argument that the district court erred in concluding, without an evidentiary
hearing, that she failed to make a prima facie showing on all elements of her claim. Neither
do we reach mother’s argument that the district court abused its discretion by declining to
award her conduct-based attorney fees, which is premised on her request of remand to the
district court for further proceedings.

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N.W.2d 92, 98 (Minn. 1987) (stating that, “[a]lthough error may exist, unless the error is
prejudicial, no grounds exist for reversal”).
Here, respondents cannot satisfy their burden to show prejudice because the district
court ultimately denied mother’s motion to reopen the dissoluti on judgment and decree.
We note that the district court’s conclusion that mother made a prima facie showing on the
first element of her fraud-on-the-court claim, that father enga ged in an intentional course
of material nondisclosures, doe s not constitute an ultimate fin ding of fact or a legal
determination that father engage d in fraud. In determining whe t h e r a p a r t y m e e t s h e r
prima-facie burden, the district court views the factual allega tions in the light most
favorable to the claim without regard for weighing the evidence. See Doering v. Doering,
629 N.W.2d 124, 130 (Minn. App. 2001), review denied (Minn. Sept. 11, 2001).
III. Mother’s motion to strike portions of respondents’ brief is moot.

On July 13, 2018, mother moved to strike portions of respondent s’ principal brief
and reply brief that contained or referenced exhibits offered b y father in district court,
which the district court excluded in response to mother’s objec tions. Because we affirm
the district court’s decision on laches, and the alleged extra- record materials do not affect
our decision, we deny the motion to strike as moot. See Drewitz v. Motorwerks, Inc., 728
N.W.2d 231, 233 n.2 (Minn. 2007) (denying motion to strike as moot where court did not
rely on challenged material).
Affirmed; motion denied as moot.